Municipal Bond Subdivision Financial Affairs Department City of Kawasaki. Investor Presentation October 2008

Transcription

1 Municipal Bond Subdivision Financial Affairs Department City of Kawasaki City of Kawasaki Investor Presentation October 28

2 1. Investment Environment of Kawasaki 1. Investment Environment of Kawasaki Number of Households Kawasaki 64,241 (as of Aug 1, 28) Japan 48.2 million (as of Oct. 1, 25) Area km 2 377, km 2 GDP 4,74.5 billion yen (23) 53 trillion yen (25) Population Population Growth Rate Average Age Labor Force Population Kawasaki 1,389,59 (as of Aug 1, 28) It corresponds to the population of Munich (Germany), Milano (Italy) 6.2% (25) (Rate of increase/ decrease of population from 2 to 25) 4.7 (as of Oct. 1, 27) 73,6 (25) Japan million (as of Oct. 1, 25).7% (25) ( Rate of increase/ decrease of population from 2 to 25 ) 43.9 (as of Oct. 1, 25) 65.5 million (25) Major Industries of Kawasaki Developing Industries of Kawasaki Registered Foreign Residents Number of Foreign Affiliated Companies Manufacturing (Electronics & Telecommunications, Precision Machinery, Petrochemistry), and Information Service Industries New Manufacturing Technologies; Information and Telecommunications; Environmental; Heath, Welfare, and Life Science; and Lifestyle and Cultural Industries 28,775 (117 nationalities) (as of Dec. 31, 26) 115 (with 83 headquarters, fifth-largest in Japan) 2,84,919 (as of Oct 1, 26) 3,5 1

3 2. Five Major Advantages of Investing in Kawasaki 2. Five Major Advantages of Investing in Kawasaki 1 Convenient Access 2 Huge Market Potential 3 Excellent Track Record of Companies Sited in Kawasaki 4 Three Science Parks Giving Rise to New Businesses 5 Outstanding Cultural and Life Environment 2

4 Advantage 1 Convenient Access Advantage 1 Convenient Access International flights area Runway B Tama River Runway A Runway C Passenger Terminal 2 Passenger Terminal 1 Connecting taxiway New runway Haneda Airport Tokyo Bay Container Terminal Port of Kawasaki Easy Access to Airports It takes 9 min. to Narita and only 13 min. to Haneda (by train) Extensive Rail and Road Network It takes 18 min. to Tokyo and 1 min. to Yokohama (by train) Further Expansion and Internationalization of Haneda Airport (services tentatively scheduled to begin in 21) Expand the departure and arrival capacities by 1.4 times. Begin regular, short-range international flight services. Expand international freight services. The Kanagawa-Haneda International Airport Linking Project aims to create a new base for exchange by constructing a new access route to Haneda Airport from Kawasaki (Kanagawa Prefecture), known as the Kanagawa Gate. New Station To Be Built By 21 (Shin Musashi-Kosugi Station on JR Yokosuka line) Will reduce travel time between Kawasaki and Tokyo and Yokohama. Advantage 2 Huge Market Potential Advantage 2 Huge Market Potential Located immediately adjacent to Tokyo and Yokohama Kawasaki is the center of the Tokyo metropolitan area, the largest consumer market in Japan!

5 Advantage 3 Excellent Track Record of Companies Sited in Kawasaki Advantage 3 Excellent Track Record of Companies Sited in Kawasaki Product Development Center Information and Telecommunication Systems, Systems Development Kawasaki Laboratory Headquarters, Kawasaki Plant Tamagawa Office, Chuo Research Laboratories Headquarter Mitsubishi Fuso Truck & Bus Tyco Electronics AMP Toshiba Research and Development Center Software Engineering Center Komukai Plant Komukai SA System Plant Hamakawasaki Plant Microelectronics Center Kawasaki Office (Plant) Intellectual Property Center Technology and Engineering Center Life Science Laboratories Research Institute for Health Fundamentals Processed Food Development and Technology Center Seasoning Development and Technology Center Application Center AminoScience Center Fermentation and Biotechnology Laboratories Production Control Center Pharmaceutical Research Laboratories Nippon ZEON Kawasaki Plant Research and Development Center Kawasaki Factory Kawasaki Plant YAKIN Kawasaki Kao Gunma Pref. Saitama Pref. Tokyo Yamanashi Pref. Kawasaki City Shizuoka Pref. Kanagawa Pref. Tochigi Pref. Ibaraki Pref. Chiba Pref. R&D Center Yako Office Tamagawa Office Kosugi Office Technology Development Center Showa Denko Kawasaki Office R&D Center Production Technology Center Nisshin Seifun Tonen General Sekiyu Kawasaki Plant, Tonen Chemical Corp. Kawasaki Plant, Chuo Research and Development Center Tokyo Electric Power Kawasaki Thermal Power Station Higashi-Ogijima Thermal Power Station JFE Higashinihon JFE Steel Tsurumi Plant Nippon Oil Kawasaki Natural Gas Power Plant Kawasaki Office, Kawasaki Natural Gas Power Plant 1

6 Advantage 4 Three Science Parks Giving Rise Rise to to New New Businesses Kanagawa Science Park (KSP) The first science park in Japan (established in 1989) and one of the largest technology incubators in Japan. It has 118 companies (as of Jan. 26). Shin-Kawasaki Science Park (KBIC, K2) Academic-industrial alliance-typed science park. Kawasaki Business Incubation Center (KBIC) Keio University Shin-Kawasaki Town Campus (K2) It has 21 companies and 7 laboratories (as of Jul. 26). Techno Hub INnovation Kawasaki (THINK) Private-sector-led science park. Custom-made research space available. It has 55 companies (as of Mar. 26). 2

7 Advantage 5 Outstanding Cultural and Life Environment Advantage 5 Outstanding Cultural and Life Environment City of Music and Cinema MUZA Kawasaki Symphony Hall and cinema complexes MUZA Kawasaki Symphony Hall (left) Growing number of new commercial establishments Lazona Kawasaki Plaza (opened on Sept. 28, 26) (about 3 tenants including a cinema complex, home appliance and general merchandise store, mega book store, restaurants and cafes) MUZA Kawasaki Central Tower (right) 6

8 3. Developing Industries of Kawasaki The Environment 3. Developing Industries of Kawasaki The Environment Highlights 1. The city has experience in overcoming pollution problems 2. Accumulation of companies with excellent environmental technologies Related News 1. Approved as a Special International Environmental District (May 23) Keihin Waterfront District in the period of rapid growth (around 197) 2. Operation of the Zero-Emission Industrial Complex (Nov. 22) 3. Holding of Eco Industries Forum (from Jul. 25) 4. Approved as an Eco-Town (from Jul. 1997) Present 7

9 4. Developing Industries of Kawasaki IT 4. Developing Industries of Kawasaki IT Highlights Accumulation of world-famous IT companies such as NEC, Canon, Hitachi, Fujitsu, Dell and IBM. Related News 1. Completion of NEC Tamagawa Renaissance City (May 25) (In order to strengthen the research and technology development structure, NEC compressed its sites into this intelligent building.) 2. Establishment of Canon s R&D base in Kawasaki (currently in progress) 3. Relocation of Pioneer s base of home electronics (spring 27) NEC Tamagawa Renaissance City *NEC press release 8

10 5. Developing Industries of Kawasaki Life Science 5. Developing Industries of Kawasaki Life Science Highlights 1. Accumulation and network of bio/life-science related companies (1) Setting up of Kawasaki Life Science Network Meeting (Oct. 23) Encourages meeting between industries and industry and academia. A total of 91 groups and 185 persons participated (FY 25). (2) Setting up of Kawasaki Salon for Scientists (Apr. 26) Established as a base for sharing knowledge and fostering of a R&D mindset. 2. Promotion of the health science industry around the Kanagawa Gate of Haneda Airport Attraction of high-tech medical facilities; and genome, bio, and allergy research institutes and incubation facilities. Related News 1. Siting of NEDO s* head office in Kawasaki (Feb. 24) * The New Energy and Industrial Technology Development Organization. It is Japan's largest public R&D management organization for promoting the development of advanced industrial, environmental, new energy and energy conservation technologies. 2. Expansion of Ajinomoto s function related to the life science industry (currently in progress) 9

11 Potential of Kawasaki City Tokyo Kawasaki Unit: 1 million Taxable income per capita (Fiscal 26) 118 Source: Personal Income Index Yokohama Unit: 1, Transition and prediction of population Actual numbers prediction Actual numbers are those as of Jan. 1 Source: Kawasaki City Future Population Estimates 1. Kawasaki Yokohama Nagoya Saitama Chiba Hamamatsu Hiroshima Shizuoka Kobe Sendai Fukuoka Kyoto Sakai Sapporo Niigata Osaka Kitakyushu 6

12 Comparison of Kawasaki s financial situation with other ordinance-designated cities High ratio of independent source of funds (ordinary ) The number of local public bodies that are not granted ordinary local allocation tax Ratio of independent source of funds 68% (ranked 2nd) Financial power index of fiscal 27: 1.6 (ranked 1st) 1% 75% 5% 25% Strong tax revenue base % 23.% 24.8% 1.7% Municipal 9.9% 13.% 2.2% 51.1% Kawasaki Others bond Treasury disbursement Prefectural disbursement Local transfer tax, local grand tax Tax allocated to local governments Municipal tax 14.9% 7.9% 42.5% Ordinance-designated cities average Comparison based on fiscal 26 reports on closing s Sapporo.835 Sendai Saitama Chiba 1.6 Kawasaki Yokohama Shizuoka 1.22 Nagoya.72 Kyoto.929 Osaka FY25-7 average.799 Sakai.69 Kobe.794 Hiroshima.686 Kitakyushu.83 Fukuoka 7

13 Analysis of taxation structure The rate of individual municipal tax is high Component ratio of individual municipal tax is high. (Ranked second in ordinance-designated designated cities.) Transition of municipal tax revenue. Steadily increasing since fiscal 24. 1% Unit: 1 million 3,5 Municipal tax Municipal tax for Municipal tax on real estate for individuals corporations Others 75% 5% 25% 14.3% 15.1% Others 38.8% 1.9% 36.% Municipal tax on real estate Municipal tax for corporations Municipal tax for individuals 39.3% 15.4% 3.2% 3, 2,5 2, 1,5 1, 5 2,657 2,687 2,627 2,72 2,628 2,551 2, ,49 1,169 1,167 1,15 1,96 1,1 1, ,868 2, ,59 1, ,11 1,126 % H12 H13 H14 H15 H16 H17 H18 H19 H2 Kawasaki City Ordinance-designated cities average Initial and supplementary budgets for FY27 Comparison based on fiscal 26 reports on closing s Initial budget for FY28 8

14 Analysis of expenditure structure (ordinary ) High ratio of personnel expenditure compared with other cities is the biggest problem in the city s structure of expenses Comparison of ratios of required expenses in annual expenditure The comparison with other ordinance-designated designated cities is based on fiscal 26 report on closing s 7% 6% Personnel assistance public debt expenditure expense allowance Personnel expense ratio: Ranked 15th out of 15 cities Assistance allowance ratio: Ranked 7th out of 15 cities Public debt expenditure ratio: Ranked 12th out of 15 cities Required expenses ratio: Ranked 12th out of 15 cities 5% 4% 12.9% 16.% 1.4% 16.5% 16.2% 15.1% 13.4% 14.9% 11.7% 13.1% 1.5% 19.9% 13.5% 13.3% 16.7% 3% 2% 21.% 12.5% 13.2% 14.3% 16.2% 16.4% 12.5% 15.% 19.9% 22.9% 25.1% 17.1% 2.2% 15.5% 16.4% 1% 14.5% 16.7% 2.4% 18.5% 2.7% 15.5% 19.6% 18.6% 19.6% 17.5% 17.6% 18.5% 16.4% 14.4% 11.7% % Required expenses ratio Sapporo Sendai Saitama Chiba Kawasaki Yokohama Shizuoka Nagoya Kyoto Osaka Sakai Kobe Hiroshima Kitakyushu Fukuoka 48.4% 45.2% 43.9% 49.2% 53.1% 47.% 45.5% 48.5% 51.3% 53.5% 53.2% 55.6% 5.1% 43.1% 44.7% 9

15 Current ratio, Primary balance Low current ratio means a resilient fiscal structure Primary balance continuing upward trend since fiscal 25 Current ratio Primary balance of general 1% 95% 9% 94.3% 93.2% 93.2% 91.4% 99.7% 96.6% 95.2% 95.8% 94.7% 94.2% 93.1% 89.% Unit: 1 million Floatation price of municipal bond Public debt expenditure Primary balance (right-hand axis) Unit: 1 million % 84.2% 85.5% 83.5% , ,8 8% Sapporo Sendai Saitama Chiba Kawasaki Yokohama Shizuoka Nagoya Kyoto Osaka Sakai Kobe Hiroshima Kitakyushu The comparison with other ordinance-designated cities is based on fiscal 26 report on closing s Fukuoka Initial and supplementary budgets for fiscal 22 to fiscal 26 Initial budgets for fiscal 27 and fiscal

16 Consolidated Balance Sheet of Kawasaki City (as of end of FY26) The whole city s s balance sheet with ordinary, special (16) and government owned companies (6) is consolidated with the balance sheets of Partial Administrative Unions, local public corporations and the third sector. Consolidated balance sheet with associated cooperative groups (Draft) Section FY24 FY25 FY26 Unit: 1 million Section FY24 FY25 FY26 1. Property, plant and equipment (Ordinary of the abovementioned assets) 31,647 31,89 32,35 19,67 19,272 19,46 1. Fixed liabilities 16,322 15,945 15,421 Local government bonds 13,869 13,75 13,399 Reserve funds, others 2,453 2,195 2,22 Assets 2. Investments 1,71 1,7 1,72 Investments and capital Loans Funds, others Current assets 1,789 1,717 1,562 Cash and deposits Accounts receivable, others 1,3 1,156 1,56 4. Deferred Total assets 35,151 35,39 35,3 Liabilities Difference between assets and liabilities 2. Current liabilities 1,398 1,581 1,625 (Local government bonds, bonds to be redeemed in the next fiscal year) 91 1,7 1,168 Total liabilities 17,72 17,526 17,46 1. Treasury disbursements 4,655 4,774 4, Prefectural disbursements Funds financed by private firms and other organizations 4. General revenue sources, others Total of difference between assets and liabilities ,446 12,684 13,78 17,431 17,783 18,254 Total net assets and liabilities 35,151 35,39 35,3 7

17 Public-sector enterprise s Accounts of companies on the recovery track Transition of each net income (loss) of municipal owned companies by s (by fiscal year) Account for overland transportation project 2,5 Account for industrial water project Account for waterworks project 1,5 Account for sewage works project Account for hospital project 5 Total balance Unit: Major factors of recovery in fiscal 22 and 23 for waterworks projects Continuous cutback in labor costs ( 4 million in fiscal 22, 5 million in fiscal 23) Decrease of expenses for water purchasing paid to wide-area Kanagawa Water Supply Authority Major causes of loss in fiscal 21 for waterworks project Increase of expenses for water purchasing paid to wide-area Kanagawa Water Supply Authority 1 million -5-1,5-2, , , ,416-3,5 FY 21 H13 H14 22 H15 23 H16 24 H17 25 H18 26 Major factors of recovery of for waterworks project Decrease of expenses for water purchasing paid to wide-area Kanagawa Water Supply Authority (Partial Administrative Unions) Increased number of subscription of water use Major cause of loss of the for hospital project Increased allowance for depreciation of Tama Hospital (which opened in February 26) Major cause of loss in for overland transportation project Increased personnel expenses due to an increased number of employees who retired at their employers suggestion 8

18 Balance sheet of Kawasaki (As of end of fiscal 26) Assets Section 1. Property, plant and equipment Expenses for public construction works Expenses for education Expenses for public health Expenses for general affairs Others (Land) 2. Capitalization, others Capitalization and investment Loan Fund, others 3. Current assets Cash and deposits Accounts receivable, others 4. Deferred Total assets Ordinary 19,46 11,939 3,863 1,643 1, (1,35) 2,8 1, ,744 Unit: million Special Municipal Simple Total enterprise total 1,48 1,533 31,41 31, ,35 1, , ,726 11,137 34,67 33,748 Liabilities Net assets Section 1. Fixed liabilities Local government bonds Carried-over expenses Reserve funds, others 2. Current liabilities Local government bonds, bonds to be redeemed in the next fiscal year Others Total liabilities 1. Treasury disbursements 2. Prefectural disbursements 3. General revenue source, others Total net assets Total net assets and liabilities Ordinary 8,887 8, ,466 2, ,667 12,278 21,744 Unit: million Special Municipal Simple Total enterprise total 243 5,285 14,415 14, ,62 13,399 13, ,318 1, ,79 1, ,996 15,733 15,715 1,455 5,141 18,874 18,33 1,726 11,137 34,67 33,748 From the fiscal 2 period, we started drawing up a balance sheet which includes every general, special and public-sector companies sin accordance with the central government standard to clarify the financial situation of the whole city of Kawasaki. When compared with the balance sheet of the previous year, total assets have increased 15.8 billion, total liabilities have decreased 26.8 billon and total net assets/liabilities have increased 42.6 billion. Of property, plant and equipment of Kawasaki, the ratio of net assets to total assets is 53.4 percent (an increase of 1 percentage point from the previous fiscal year). When compared with the ordinary, total liabilities are comparatively larger. As municipal bonds are issued at a high frequency to make funds to keep property, plant and equipment in good condition in the municipal enterprise, the ratio of total liabilities is higher than in that of the general 9

19 Consolidated balance sheet with associated cooperative groups (Draft) (As of end of fiscal 26) Assets Section 1. Property, plant and equipment Expenses for public construction works Expenses for education Expenses for public health Expenses for general affairs Others (Lands) 2. Capitalization, others Capitalization and investment Loan Fund, others 3. Current assets Cash and deposits Accounts receivable, others 4. Deferred Total assets Ordinary 19,46 11,939 3,863 1,643 1, (1,35) 2,8 1, ,744 Special 1, ,726 Unit: million Municipal Third Simple Total enterprise sector and total others 1, , ,967 32,35 2,95 1, , , ,574 32,35 1, , , ,3 Difference between assets and liabilities 1. Fixed liabilities Local governmentbonds Carried-over expense Reserve fund, others 2. Current liabilities Local government bonds, bonds to be redeemed in the next fiscal year Others Total liabilities 1.Treasury disbursements 2.Prefectural disbursements 3. Funds financed by private firms and other organizations 4. 4General revenue sources, others Total of difference between assets and liabilities Total net assets and liabilities Unit: million Municipal Third Ordinary Special Simple Total enterprise sector and total others 8, ,285 1,35 15,765 15,421 8, ,62 13,399 13, ,35 2,34 1, ,65 1,625 Kawasaki municipal government provides services to citizens through the administration as well as associated corporate bodies financed by the municipal government. To disclose the financial situation of the city and its associated organizations as a unified body, Kawasaki has consolidated partial administrative unions, local public corporation and the third sector to the city s balance sheet, and draws up a consolidated balance sheet (draft). When comparing the consolidated balance sheet with the total balance sheet, the total liabilities are comparatively larger because the liabilities ratio of the associated organizations is larger. Liabilities Section 579 9,466 2, ,667 12,278 21, ,455 1,455 1, ,996 2, ,648 5,141 11, , ,967 1, ,415 4, ,983 19,159 36,574 1, ,46 4, ,78 18,254 35,3 1

20 Balance sheet of general of Kawasaki Unit: million Section (1) Property, plant and equipment End of fiscal 22 18,432 End of fiscal 23 18,86 End of fiscal 24 19,67 End of fiscal 25 9,273 End of fiscal 26 19,46 Balance 187 Ratio of increase/ decrease 1. Expenses for general affairs 882 1,1 1,81 1,5 1,29 (21) (2.) Assets Liabilities Net assets Expenses for public construction works Expenses for commerce and industry (2) Capitalization, others (3) Current assets Total assets (1) Long-term liabilities Local government bonds (2) Current liabilities Total liabilities (1) Treasury disbursements (2) Prefectural disbursements (3) General revenue source and others Total of net assets 11, , ,395 8,39 7, ,683 2, ,197 11,712 11, , ,15 8,94 8, ,327 2, ,175 11,688 11, , ,333 9,12 8, ,577 9,612 2, ,215 11, , ,61 9,51 8, ,612 2, ,395 11,998 11, , ,744 8,887 8, ,466 2, ,667 12, (5) 41 (94) 134 (164) (14) 18 (146) 13 (5) (1.7) 2.1 (25.5).6 (1.8) (1.7) 3.1 (1.5).6 (2.) Index Distribution ratio of net assets (%)

21 Statement of local government administration costs (General ) [Administration costs] Unit: 1million, % FY24 FY25 FY26 Section/ FY Distributi Distributi Distributi Amount Amount Amount on on ratio ratio on ratio (1) Personnel expense 99, , , Expenses for personnel matters Expenses for properties Cost for transfer payment (4) Construction operation fee (Grant-in-aid to other organizations) Subtotal (1) Costs of restoring a devastated area (1) Public debt expenditure (Only for interests) (2) Losses due to nonpayment Subtotal Administrative costs A Other costs (2) Reserve fund for employees' retirement benefits Subtotal (1) Cost of supplies (2) Maintenance fee (3) Depreciation expense Subtotal (1) Assistance expense (2) Support fee (3) Transfers to special 1,325 11,246 51,59 5,186 47,678 14,454 79,321 45,35 31,22 6, ,128 19,821 1,718 21, , ,181 18,69 51,352 5,428 47,71 14,481 81,218 43,18 28,567 5, , ,7 1, , , ,153 15,751 5,837 5,539 47,958 14,334 84,46 42,964 3,625 7,53 165,498 16,49 1, , , [Revenue] Unit: 1million, % B/A D/A Section/ FY (1) Usage charge, commission, etc B (2) Treasury (prefectural) disbursement C C/A (3) General revenue source D (4) Net depreciation expenditures of national (prefectural) treasury disbursement Revenue (B + C + D + E) FY24 39,93 1.2% 58, % 295, % 8,68 41, , , % 58, % 77.9% 8, ,574 FY , , % 59, % 8.1% 8, ,231 FY26 Amount Distributi Distributi Distributi Amount Amount on ratio on ratio on ratio

22 Fiscal 28 plan to issue Kawasaki municipal bond Of the balance s total amount of 18.2 billion, total amount of private funds is billion (93 percent of the total). Of the total issued amount of publicly offered bonds of 11 billion (61 percent of the total), the bonds issued independently by Kawasaki amount to 75 billion (42 percent of the total). Total issued amount of private placement bonds in banks is 56.8 billion (32 percent of the total). Section Term Amount issued Apr 28 May Jun Jul Aug Sep Oct Nov Dec Jan 29 Feb Unit: 1 million Mar May Public offering bonds Issued independently by Kawasaki Publicly offered local government bonds 5 years years years 1 Issuance of spot bonds on annual basis 2 years 1 Issuance in the first half 2 years or 3 years 1 Issuance in the second half Joint issue 1 years Private placement bonds on banks Securities issue or bond issue 5 years (some 4- year bonds) years Superlong-term bond To avoid financial risk, we evenly issue bonds with three different termsmid-term, long-term and super-long-term bonds. While maintaining a certain scale of public-offering bonds, we will put on market private placement bonds on banks. (The ratio of publicoffering bonds to private placement bonds on banks is 66:34.) While we expect the public fund to be decreased, we will secure a certain amount. (Ratio of private to public is 93:7.) 13

23 City of Kawasaki Address: 1, Miyamoto-cho, Kawasaki-ku, Kawasaki-shi,